Baidu, Inc. (NASDAQ:BIDU) Q1 2019 Earnings Conference Call Transcript

May 16, 2019 • 09:15 pm ET

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Baidu, Inc. (NASDAQ:BIDU) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Hello, and thank you for standing by for Baidu's First Quarter 2019 Earnings Conference Call. (Operator Instructions) Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the meeting over to your host for today's conference, Sharon Ng, Baidu's Director of Investor Relations.

Executive
Sharon Ng

Hello, everyone, and welcome to Baidu's first quarter 2019 earnings conference call. Baidu's earnings release was distributed earlier today, and you can find a copy on our website as well as on newswire services. On the call today, we have Robin Li, Baidu's Chief Executive Officer; and Herman Yu, Baidu's Chief Financial Officer. After our prepared remarks, we will hold a Q&A session.

Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC, including our Annual Report on Form 20-F. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Our earnings press release and this call include discussions of certain unaudited non-GAAP financial measures. We have made minor adjustments to our non-GAAP measures and retroactively applied these changes for comparison purposes. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures, and is available on our IR website at ir.baidu.com.

As a reminder, this conference is being recorded. In addition, a webcast of this conference call will also be available on Baidu's IR website. I will now turn the call over to our CEO, Robin.

Executive
Robin Li

Hello, everybody, and thank you for joining our call today. Our first quarter revenue for the most part were solid, reaching RMB24.1 billion, up 21% year-over-year, excluding revenue from divested business. Our Q1 revenue were impacted by industry specific government policies and our self-directed health care initiative, which required healthcare marketing customers to move their ad landing pages on to Baidu's platform.

Towards the end of Q1, we began to see the impact of macro environment compounded by a significant release of ad inventory into the market, causing CPM, post the Chinese New Year, to not rebound as pronounced as we had historically experienced. Although, the Chinese government has announced many economic policies to bolster the economy, given the current macro conditions, tighter government scrutiny on content, cutbacks from the VC community and so forth, we are taking a cautious view that online marketing in the near term will face a more challenging environment.

We are reviewing our resource requirement and improving our execution capabilities, which Herman will discuss in more detail later. While greater operational efficiency will be a focus for us, our priority will be to strengthen our mobile business and make the necessary investments to position